Payments on account (POA)

Produced by Tolley

The following Value Added Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Payments on account (POA)
  • Coronavirus (COVID-19)
  • What is are payments on account?
  • Who needs to make payments on account?
  • Calculating the POA amount
  • Anti-avoidance domestic reverse charge
  • POA due dates and payments
  • VAT return balancing payment
  • Payments
  • HMRC banking or account details
  • More...

IP COMPLETION DAY: 11pm (GMT) on 31 December 2020 marked the end of the Brexit transition / implementation period entered into following the UK’s withdrawal from the EU. At this point in time, key transitional arrangements came to an end and significant changes began to take effect across the UK’s VAT and customs regime. This document contains guidance on subjects potentially impacted by these changes. Before continuing your research, see the Brexit — overview guidance note.

This guidance note provides and overview of the payments on account regime.

Coronavirus (COVID-19)

As a result of the coronavirus (COVID-19) pandemic, businesses were able to delay certain VAT payment, see the Coronavirus (COVID-19) and VAT - delaying payments guidance note for more details.

What is are payments on account?

VAT registered businesses that have an annual VAT liability of more than £2.3m are required to make payments on account (POA).

Businesses that are required to make POA make interim payments at the end of months two and three for each VAT return quarter. The interim payment is intended to cover part of the overall VAT liability for the VAT return quarter. The balancing payment for that quarters' VAT liability will be settled when the business submits its VAT return payment.

POA must be made electronically and the cleared funds must be in HMRC's account by close of business on the due date (or on the last working day if that is earlier).

It should be noted that under VATA 1994, s 83 businesses have no right of appeal against being included within the POA regime. However, businesses who come within the scope of the POA scheme can use the alternatives suggested below rather than make POA.

Who needs to make payments on account?

UK VAT registered businesses need to make POA if:

  1. they submit quarterly VAT returns

  2. in any period of 12 months or less the business' total VAT liability was at least £2.3m

When determining whether the threshold has been exceeded HMRC will include the

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